Supply Chain Maturity

The supply “blogosphere” is currently blogging on “Critical Supply Strategies for Succeeding in a Dynamic World“. It’s the cover story of the current issue of Inside Supply Management and is mentioned for example on Michael G. Lamoureux’s Sourcinginnovation Blog.

I like the article – it’s similar to IBM’s CPO study I’ve mentioned in of my previous blogs especially the critical supply strategies. I like this kind of studies because they provide directions for longterm objectives and lot of things to consider designing a supply (chain) strategy.

The real challenge from my point of view is not the strategy design process itself- it’s the movement from one maturity level to the next level and the transforming the strategy in real life. Additionally these types of strategies don’t fit for all companies. Their maturity level is different. All companies are equal, some are more equal (adopted from George Orwell’s Animal Farm).

One recommended critical supply strategy is to manage and enable the supply management organization. An indicator of procurement performance is “maverick buying” as a percentage of annual purchases. A low maverick buying rate indicates good performance and at least how procurement manages the spend – that’s spend management. Excellent explained on Jason Busch Spend Management Blog.

You see there’s a huge gap between leading procurement organizations and followers.

Another critical supply strategy is to develop and manage suppliers to deliver a competitive advantage in cost, quality, delivery/responsiveness, technology, and innovation achieved in a balanced way. Based on our research this is another area for different maturity levels. The maturity level of all companies is low by varying degrees on this strategy. Only Australian firms have a more balanced approach. See slide below.

Based on my experiences to define critical supply strategy aligned to current market environment is easier to do, but the next step of transformation (“do the strategy”) will be the real challenge. Happy to discuss.

Scoring High on the Supply Chain Maturity Model – II

Last week I was speaker at the CSCMP Europe 2007. I’ve presented how leading practices are being used to transform supply chain performance. The presentation is created based on IBM previous Global Value Chain Study.

This study, undertaken by IBM Global Business Services in
conjunction with APQC, identifies current practices, captures significant trends and establishes operational performance benchmarks in several key areas of Supply Chain Management: New Product Development, Planning, Procurement, and Logistics. By analyzing responses from companies across a range of industries, in multiple geographies worldwide, it provides unique insight into challenges and demonstrates how supply chain management is changing from a static and cost-centric function to an evolving, integrated business model.

Discover how leading practices are being used to transform supply chain performance by attending this session on the Global Value Chain Study.
This is my presentation. By the way, one of my key messages (it’s not in the presentation) was to think on the potential of utilizing Web 2.0 in Supply Chain Management. I think that Web 2.0 will reduce the cost of collaboration and one key element of Supply Chain Management is collaboration….